Washington – Wall Street has stepped up its contributions to most politicians, including those in Connecticut’s congressional delegation.
Although Washington and the financial industry have always had a close relationship, political contributions from the securities and investment sector have increased over the past decade to the point that they are one of the top five sources of campaign donations to Connecticut’s two senators and two of the state’s House delegation.
The information comes from the Center for Responsive Politics, which analyzed the lawmakers’ reports to the Federal Election Commission and ranked personal and PAC donations by business sectors, labor and other categories of donors.
Individuals and political action committees connected to Wall Street are the No. 1 source of campaign donations for Rep. Jim Himes, D-4th District.
They are the No. 2 source of campaign donations for Sen. Richard Blumenthal, D-Conn.
They are the No. 3 source of campaign donations for Sen. Chris Murphy, D-Conn.
And they are the No. 5 source of campaign donations for Rep. John Larson, D-1st District.
Wall Street money may not be as prominent in the campaign war chests of Connecticut Reps. Rosa DeLauro, D-3rd District, and Joe Courtney, D-2nd District, but both representatives have also received hundreds or thousands of dollars from individuals and PACs connected to the securities and investment sector, according to the center. The center said it doesn’t have enough information yet on money donated to Elizabeth Esty to complete an analysis. Esty was elected from the 5th District to the House of Representatives last years.
When asked about the contributions, Connecticut lawmakers said the financial community is a key constituency in the state. In some cases, they downplayed the importance of the donations.
Blumenthal said he’s been “proud to work with and receive support from people across Connecticut’s diverse economy,” during his long career as Connecticut attorney general and shorter one as the state’s senior U.S. senator.
“As we work hard to bolster our recovery and create jobs, I always look forward to hearing the perspectives of financial services industry leaders in our state, as well as other industry groups, consumer groups, unions, local elected officials and an array of key stakeholders,” he said.
Courtney press secretary Elizabeth Donovan said the lawmaker has “a commitment to Main Street values” that has resulted in two-thirds of his campaign contributions to come from “grass-root individual donors.” Courtney has received about $245,000 from Wall Street connections since he first ran for Congress in 2006.
If money from other financial institutions, including the insurance industry, commercial banks and real estate is also considered, amounts contributed to Connecticut lawmakers soar.
The insurance industry, for instance, is the single largest source of campaign cash for Larson, who represents the insurance mega-hub of Greater Hartford. Larson has received more than $1 million from the industry since he first ran for office in 1998.
Larson pointed out he has also received 750 donations from small donors who gave less than $100 this year, more small donations than he’s ever received at this point in a campaign cycle.
“I am proud to continue my efforts to put our elections back in the hands of everyday Americans,” he said.
But it’s Wall Street that’s moving up the charts when it comes to the re-election campaigns of most members of Congress.
According to the Center for Responsive Politics, the securities and investment sector has risen to No. 2 nationally, a close second behind retired Americans, in the amount of money (nearly $25 million) donated so far in the 2013-2014 election cycle. And real money-raising won’t heat up until next summer, a few months before November’s midterm elections.
In the 2011-2012 election cycle, which included a presidential campaign, the industry gave $277 million.
Sheila Krumholz, executive director of the Center for Responsive Politics, said there are several reasons Wall Street gives to Connecticut lawmakers and other members of Congress.
“The financial sector is where the money is. It’s like (bank robber) Willie Sutton who was asked why he robbed banks, lawmakers go to where the money is,” Krumholz said. “That’s why there’s an express path beaten from Washington to Wall Street.”
Wall Street usually favors Republicans over Democrats – a notable exception is President Obama’s success in raising money from the financial sector in 2008. But there are reasons Walls Street gives to Connecticut’s Democrats, Krumholz said, including the geographic proximity to New York that makes Connecticut home to many Wall Street executives, the strong hedge fund industry in the state and the presence of other financial institutions .
“In Connecticut, the financial services industry employs many residents and has a strong presence in our local and state business communities,” he said. “As budget negotiations continue in Congress, this industry and their employees will continue to advocate for their priorities.”
Krumholz also said financiers like to “hedge their bets,” by giving to the party in power, whether it be the Democrats or the GOP.
Since the Senate is now controlled by Democrats, it’s no surprise that Blumenthal and Murphy receive sizable Wall Street contributions, she said.
Among Murphy’s top 20 campaign contributors since he first ran for Congress in 2006 are executives and PACs from JPMorgan Chase & Co. ($49,250) and Goldman Sachs ($43,899).
“The financial services industry employs thousands of people and is a major pillar of Connecticut’s economy. That’s why many people from that industry, as well as teachers, firefighters, factory workers, and retirees have contributed to Chris’ campaigns over the years,” said Ben Marter, Murphy’s press secretary. Marter has also served as the Murphy campaign’s press secretary.
Donors linked to Greenwich-based Tudor Investment ($21,800,) and ING Group ($20,150) are among Blumenthal’s top 20 contributors.
But it’s Himes who leads in donations — nearly $2 million — from Wall Street. Only 12 other members of Congress receive more campaign cash than he does from the securities and investment world, Krumholz said.
Besides living in Greenwich, the hedge fund capital, and representing wealthy Fairfield County, Himes has worked on Wall Street and sits on the House Financial Services Committee.
“Fairfield County is home to many financial services workers and companies, which are vital to Connecticut’s economy, so of course the congressman has received contributions from people that work in that industry,” said Himes spokeswoman Elizabeth Kerr.
Like all members of the Connecticut delegation (except Blumenthal and Esty, who were not in office at the time it was approved in 2010), Himes supported the Dodd-Frank bill that ushered in the most significant and wide-ranging financial regulations since the reforms that were put in place after the Great Depression.
But since then Himes has backed modifications to the Dodd-Frank Act that have been pushed by Wall Street.
Himes split from his party Tuesday, becoming one of just 30 House Democrats to vote with nearly all Republicans for legislation promoted by Wall Street called the Retail Investor Protection Act. No other member of the Connecticut congressional delegation voted for the bill.
The bill would prohibit the Securities and Exchange Commission from issuing a rule establishing a standard of conduct for brokers and dealers before it has determined whether individual investors would be harmed by the change.
On Wednesday, Himes voted for a bill he co-sponsored that Wall Street also supports: the Swap Regulatory Improvement Act. This bill would expand the ability of banks to use swaps — the exchange of one security for another — as financial tools for hedging risk. Dodd-Frank required many swaps trades to be handled by non-bank institutions. This time, Esty and Larson joined him in supporting the legislation, but most Democrats voted “no.”
“The bill ensures that businesses can insure against prices fluctuations in products and commodities that impact their bottom lines, adding stability to the overall economy,” Himes said in an email to the Connecticut Mirror. “The bill also increases transparency so that we can more carefully monitor the hedging activity of banks.”
Lee Drutman, a senior fellow at the Sunlight Foundation, a Washington-based nonprofit that focuses on open government, said the Dodd-Frank Act is responsible in large part for Wall Street’s increased involvement in federal politics.
He said the securities and investment sector will continue to seek modifications of the act, and try to curry favor with as many lawmakers as it can. He said Congress’ threat of tax reform is also motivation for Wall Street to give campaign cash in attempts to protect their interests.
But there’s another reason money from Wall Street has become more important in political campaigns, Drutman said.
“Running for office is more and more expensive … so the people who have the most money become more and more important,” he said.